TORONTO (Reuters) - The Toronto Stock Exchange’s main index plunged more than 3 percent on Tuesday, weighed down by falling commodity prices and closing in on January’s 2008 low.
The heavyweight materials and energy sectors led the way down. Oil prices tumbled on expectations OPEC would leave output targets unchanged and as the hurricane threat to U.S oil operations in the Gulf of Mexico eased.
In the oil patch, Canadian Natural Resources (CNQ.TO) fell 6.9 percent to C$74.50.
A drop in metals prices hurt the materials sector, where fertilizer producer Potash Corp of Saskatchewan (POT.TO), one of the biggest losers, was down 7.5 percent to C$150.27.
The large financial sector held up better than the resource groups, but still fell 1.2 percent as worries about the ability of U.S. investment bank Lehman Brothers LEH.N to raise capital fueled concern about the broader banking sector.
“I think with the global slowdown that we have, it’s not surprise that the commodities have been reduced in prices to where they right are now,” said Adrian Mastracci, portfolio manager and president at KCM Wealth Management Inc.
“I do think in the long term the demand for commodities will pick up again. It just doesn’t look as if it will happen in the very near future, right now it looks gloomy,” he said.
The S&P/TSX composite index .GSPTSE closed down 487.88 points, or 3.86 percent, at 12,146.76 with eight out of 10 sectors down.
After posting triple-digit losses in five out of six sessions, the index came closer to the 2008 closing low of 12,132.13, hit on January 21. Since last Tuesday, the index has fallen more than 11 percent.
The sharp declines have pushed the index within striking distance of a bear market, generally defined as a 20 percent decline from its highs. The Toronto index is down more than 19 percent from its June highs.
“Bear market is the bottom line,” said Levente Mady, broker at MF Global Canada, in Vancouver, British Columbia.
“Ever since the commodities sector has turned around and started moving down, the TSX has suffered greatly and today is just another example that things are broken across the board,” Mady said.
The energy sector was down 6.5 percent and the materials sector was down 8.2 percent. Canadian Oil Sands Trust COS_u.TO fell 10.6 percent to C$40.00, and Inmet Mining IMN.TO slid 9.7 percent to C$49.80.
The only two bright spots on the index were the consumer sectors, which were lifted by the drop in oil prices.
The consumer staples group was up 1.1 percent and the consumer discretionary sector inched up 0.03 percent. Cheese-maker Saputo (SAP.TO) rose 6.6 percent to C$27.60.
Market volume was 572 million shares worth C$8.6 billion, with decliners outpacing advancers 1,317 to 330. The blue chip S&P/TSX 60 index .TSE60 closed 29.93 points, or 3.97 percent, lower at 724.46.
In New York, stocks slumped on worries over Lehman Brothers, sending the Dow Jones industrial average .DJI down 279.11 points, or 2.42 percent, to 11,231.63. The Nasdaq Composite Index .IXIC closed down 59.95 points, or 2.64 percent, at 2,209.81.
Editing by Peter Galloway